Hospital furniture depreciation limited to the lower rate because a hospital is not a welfare centre under the schedule.

Depreciation on furniture used in a hospital was confined to 10 per cent because a hospital was not treated as a welfare centre under the relevant depreciation entry. On that basis, the higher 15 per cent rate was unavailable to the assessee. The text also states that rectification under section 154 of the Income-tax Act is confined to a mistake apparent from the record, and the adjustment was upheld where the correct statutory depreciation rate applied. The references were answered in favour of the Revenue, with the assessee restricted to depreciation at 10 per cent on the hospital furniture.

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Issues: (i) whether depreciation on furniture used in a hospital was allowable at 15 per cent or only at 10 per cent on the footing that the hospital was a welfare centre; (ii) whether the reassessment made under section 154 of the Income-tax Act, 1961 was justified when the question of the applicable depreciation rate was said to be debatable.

Issue (i): whether depreciation on furniture used in a hospital was allowable at 15 per cent or only at 10 per cent on the footing that the hospital was a welfare centre

Analysis: The applicable depreciation rate depended on whether the hospital could be treated as a welfare centre under the relevant schedule entry and rule. The Court held that a hospital does not fall within the meaning of a welfare centre, and therefore the higher rate was not available.

Conclusion: Depreciation on the hospital furniture was allowable only at 10 per cent and the finding was against the assessee.

Issue (ii): whether the reassessment made under section 154 of the Income-tax Act, 1961 was justified when the question of the applicable depreciation rate was said to be debatable

Analysis: Section 154 permits correction only of a mistake apparent from the record. Since the underlying question was ultimately resolved against the assessee on the basis that a hospital is not a welfare centre, the adjustment to the depreciation allowance could not be sustained in favour of the assessee.

Conclusion: The order under section 154 was upheld in substance and the issue was decided against the assessee.

Final Conclusion: The references were answered in favour of the Revenue, and the assessee was held entitled only to depreciation at 10 per cent on the hospital furniture.

Ratio Decidendi: A hospital is not a welfare centre for the purpose of the depreciation schedule, and the allowable depreciation on its furniture is restricted accordingly; a rectification under section 154 cannot stand where the correct statutory rate is applied on that basis.

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